THE DIGITAL DIVIDE: ICT DEVELOPMENT INDICES 2004 · The Digital Divide: ICT Development Indices...

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

THE DIGITAL DIVIDE:

ICT DEVELOPMENT INDICES 2004

United Nations New York and Geneva, 2005

The Digital Divide: ICT Development Indices Report 2004

ii

NOTE

UNCTAD serves as the lead entity within the United Nations Secretariat for matters related to science and technology. UNCTAD's work is carried out through intergovernmental deliberations, research and analysis, technical assistance activities, seminars, workshops and conferences. The term "country" as used in this publication refers, as appropriate, to territories or areas. The designations employed and the presentation of the material do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, city or area, or of authorities, or concerning the delimitation of its frontiers or boundaries. In addition, the designations of country groups are intended solely for statistical or analytical convenience and do not necessarily express a judgement about the stage of development reached by a particular or area in the development process. Reference to a company, public or private centres and national programmes and their activities should not be construed as an endorsement by UNCTAD of those institutions or their activities.

Copyright United Nations, 2005 All right reserved

UNCTAD/ ITE/IPC/2005/4


iii

ACKNOWLEDGEMENTS This report was prepared in response to General Assembly resolution A/58/200, in which UNCTAD was invited to collaborate with the United Nations ICT Task Force and the ITU to prepare this report and contribute it to the World Summit on the Information Society. The report has been prepared under the direction and supervision of Mongi Hamdi by Philippa Biggs and Alexandre Dabbou. Overall guidance was provided by Khalil Hamdani. Contribution and comments on the report were received from Malik Hamid, Dong Wu, Masataka Fujita, Rouben Indikian and Susan Teltscher. Comments on the methodology and other aspects of the Indices were also received during the various stages of preparation of the first issue of the report in 2003 from Sanjaya Lall, Calestous Juma, Jean Camp, Alan Porter and Larry Press, as well as from members of the Commission on Science and Technology for Development. Production assistance was provided by Laila Sède. The cover was designed by Diego Oyarzun-Reyes. We wish to thank the International Telecommunication Union for providing us with the telecommunication data needed to estimate the indices.


iv

PREFACE The digital divide between the information-rich and the information-poor is of increasing concern. A major challenge for policy-makers at the national and international level, therefore, lies in addressing the issue of digital divide between rich and poor countries, rural and urban areas, men and women, skilled and unskilled citizens, and large and small enterprises. Information and communication technologies (ICTs) offer unique opportunities for developing countries to narrow the development gap with industrialized countries. They have the potential to assist developing countries “leap frog” entire stages of development. However, despite the potential benefits offered by ICTs, significant barriers to their effective use exist in both developed and developing countries. These barriers must be addressed to allow the realization of the full potential of ICTs'. Some barriers may be endemic (e.g. the generation gap, learning processes and gaining experience in ICTs). Developing countries have to deal with problems of telecoms infrastructure, poor computer and general literacy, lack of awareness of the Internet and regulatory inadequacy. Benchmarking the extent of ICT development is an important tool for policy-makers. It allows comparisons between countries and indicates how well countries are doing compared to others in terms of adaptation, mastery and development. Comparison with better-performing countries helps identify policies for further improvement and progression, which forms part of this report. Cross-country analyses without benchmarking the extent of the digital divide lack the depth of insight required for policy purposes. The WSIS Plan of Action calls for “realistic international performance evaluation and benchmarking (both qualitative and quantitative) through comparable statistical indicators and research result. A composite Information and Communication Technology (ICT) Development index could show the statistics while the report would present analytical work on policies and their implementation” (p.13). This report presents such analysis and research, and seeks to inform policy-making and enlighten decision-makers in their attempts to promote ICT development, especially in developing countries. This report updates UNCTAD's ICT Development Indices to benchmark ICT development and review trends in the digital divide. It presents a summary of the policy options that countries can adopt to foster ICT development, and illustrates these by reviewing four country case studies that have successfully promoted growth in ICTs. Importantly, this Report adds depth to its benchmarking analysis by describing examples of innovative grassroots programmes in the field of ICTs in Africa. One of the key findings of the analysis is that it is not merely policy that matters but also what drives the policy and the quality of its implementation. The report contributes to the discussion on how to overcome the digital divide on the basis of examples of ICT policies that are being enacted in practice and to draw guidance as to how implementation might be improved. It represents part of UNCTAD’s contribution to the World Summit on the Information Society, to be held in Tunis in November 2005. Carlos Fortin Officer-in-Charge of UNCTAD


v

CONTENTS

PREFACE ................................................................................................................... iii ABBREVIATIONS AND ACRONYMS .....................................................................v OVERVIEW..................................................................................................................1 1. BENCHMARKING ICT DEVELOPMENT ..........................................................5

1.1 2002 ICT Development Indices ........................................................................5 1.2 Comparison with 1995 ......................................................................................6 1.3 Regional Performance, 1995 – 2002 .................................................................8

2. THE DIGITAL DIVIDE .......................................................................................10 2.1 Telephone mainlines ......................................................................................11 2.2 Mobile subscribers .........................................................................................11 2.3 Invenet hosts...................................................................................................12 2.4 Personal computers ........................................................................................13 2.5 Invenet users...................................................................................................14 3. ICT POLICIES......................................................................................................16 4. SOME SUCCESS STORIES ..................................................................................21

4.1 Overview .........................................................................................................21 4.2 Expansion of ICTs in the People’s Republic of China....................................21 4.3 Expansion of ICTs in the Arab Republic of Egypt .........................................22 4.4 Expansion of mobile Internet in the Republic of Korea..................................24 4.5 Expansion of mobile telephony in the Czech Republic ..................................25

5. ICT DEVELOPMENT IN AFRICA .....................................................................28

5.1 Overview .........................................................................................................28 5.2 Key programmes for promoting ICT development.........................................29 5.2.1 Universal Access Funds (UAFs) ..................................................................29 5.2.1.1 Uganda's Rural Communications development Fund (RCDF) ................32 5.2.2 Collective Access Centres ............................................................................33 5.2.2.1 Egypt: Pionering IT Clubs (ITCs)............................................................35 5.2.3 The importance of relevant content: The case of Mali.................................36 5.3 Conclusions .....................................................................................................38

6. APPENDICES.........................................................................................................39 Appendix 1-a. Index methodology...........................................................................39 Appendix 1-b. Definition of components.................................................................44 Appendix 1-c. Data sources .....................................................................................51 7. REFERENCES........................................................................................................60 SELECTED UNCTAD PUBLICATIONS ON SCIENCE AND TECHNOLOGY..........................................................................................................62 QUESTIONNAIRE.....................................................................................................66


vi

ABBREVIATIONS AND ACRONYMS ADSL Asymmetric Digital Subscriber Line CEE Central and Eastern Europe CIS Commonwealth of Independent States CSTD Commission on Science and Technology for Development DSL Digital Subscriber Line EU European Union GDP Gross Domestic Product ICP Internet Content Provider ICT(s) Information and Communication Technology (Technologies) ISDN Integrated Services Digital Network ISP Internet Services Provider IT Information Technology ITU International Telecommunication Union IXP Internet Exchange Point MISP Mobile Internet Service Provider (Republic of Korea) OECD Organisation for Economic Cooperation and Development PC Personal Computer P(S)TN Public (Switched) Telephone Network PTO Public Telephone Operator RCDF Rural Communications Development Fund RTDF Rural Telecommunications Development Fund (Uganda) SOE State-owned Enterprise SSAs Sub-Saharan African UAFs Universal Access Funds UCC Ugandan Communications Commission UNCTAD United Nations Conference on Trade and Development UNESCO United Nations Educational, Scientific and Cultural Organization UNDP United Nations Development Programme USP Universal Service Provision VoIP Voice over Internet Protocol WSIS World Summit on the Information Society WTDI World Telecommunication Development Indicators (published by the ITU) WTO World Trade Organization

OVERVIEW

The importance of technology to economic development has long been recognized. This may be especially true of Information and Communication Technologies (ICTs), which cut across all economic activities and have a wide range of applications. They offer the potential for increased availability of information, new means of communication, re-organization of productive processes and improved efficiency in many different economic activities. Despite the potential benefits that can be offered by ICTs, developing countries face significant obstacles to ICT connectivity and access. The underlying causes of low levels of ICT penetration in developing countries includes a lack of awareness of what these technologies can offer; insufficient telecommunications infrastructure and Internet connectivity; expensive ICT access; absence of adequate legal and regulatory frameworks; shortage of requisite human capacity; failure to develop local language content; and a lack of entrepreneurship and business culture open to change, transparency, and social equality. These problems are reflected in highly uneven growth in the use of ICTs across countries. The so-called digital divide between the information-rich and the information-poor is of increasing concern. A major challenge for policy-makers at the national and international level, therefore, lies in addressing the issue of the digital divide: between rich and poor countries, rural and urban areas, men and women, skilled and unskilled citizens, and large and small enterprises. From a historical respective, technological gaps, uneven diffusion and possible exclusion from benefits of technologies are not new. Telephony and electricity are still far from being evenly diffused. With ICTs, however, the size and scale of the potential benefits foregone through failure to participate in the new 'digital society' are likely to be much greater. It is essential, therefore, that steps are taken to ensure that developing countries have the ability to participate in the knowledge economy. The formulation and implementation of national ICT strategies that deal effectively with the preceding challenges must be particularly sensitive to two elements: first, the need for mechanisms to monitor and assess ICT readiness, usage and impact; and second, the need to link ICT policies to other development policies, such as education, trade and health to allow for benefits from synergies between different elements and more broad-based diffusion of ICT. This report responds to these two needs. It monitors and assesses the international digital divide and its implications. It evaluates ICT development using a range of indicators to benchmark connectivity, access, ICT policy and overall ICT diffusion in a cross-country analysis of a total of 165 countries. The findings are presented in the ICT Development Indices. Further, it extends this benchmarking analysis with a consideration of the policy options open to policy-makers, and how chosen policies can be implemented and linked to a range of other policies. The aim is to make a useful contribution to ICT policy thinking for public and private decision-makers, with a focus on developing countries and, in particular, Africa.


2

In the benchmarking analysis, countries from the Organisation for Economic Cooperation and Development (OECD) continue to dominate the upper rankings. This lead is partly due to the priority given to ICT policies by OECD countries, with policies across a broad range of fronts (ICT policies are summarized in Chapter 3). South Asian and African countries occupy the lower half of the rankings. Sub-Saharan countries dominate the lower end. This reflects that, as a region, Africa still has a considerable way to go in connectivity and ICT diffusion to hold its own with other regions. Major gains in connectivity have been made by transition economies. Changes in rankings are generally small for Arab and Asian countries. Latin American and Caribbean countries have maintained their levels of ICT diffusion. Intriguingly, a wide variety of countries have made gains in ICT diffusion, while losses are confined to certain regions, notably Africa. Trends in the digital divide have been analysed. Levels of inequality in access to ICTs remain high still, around twice average levels of income inequality. Trends in the digital divide show sharply contrasting trends according to the type of technology. The distributions of Internet hosts and personal computers remain highly uneven. Mainline telephony shows small, but steady reductions in inequality. However, the distributions of mobile telephony and Internet users across different countries suggest strong gains in access to mobiles and the Internet and an expansion of ICT access in developing countries in particular. Mobile telephony and Internet usage suggest that the digital divide measured by inequality in these distributions may be reducing. The lack of matching gains in more widespread access to personal computers however suggests that gains in Internet usage and access are being achieved mostly through shared access. Policy initiatives such as community telecenters and Public Access Points are thus increasingly important. Promising examples of such initiatives are examined in Chapter 5. The analysis of the digital divide presented in this study provides evidence that marked disparities in ICT access and usage between countries continue to exist, and remain sizeable, although disparities in Internet and mobile usage are reducing rapidly, suggesting more even and widespread access to ICTs. For further insight, this benchmarking analysis has been extended with a summary of different policy tools that may be used to promote ICT development, and the experiences of some countries that have been successful in promoting access to ICTs are reviewed. Similar policies are relevant to developing countries, although their policy mix differs according to individual countries’ needs and circumstances. Policy mixes in developing countries often prioritize resources and seek to increase basic connectivity, expand access and retain skilled labor. One of the key findings of this report is that it is not just the policy that matters: who drives the implementation of policy and how it is implemented matter greatly. How does a leading role by government in encouraging Internet expansion (in the Republic of Korea and Egypt) impact Internet expansion, in contrast to more demand-led expansion driven by consumers (in the People’s Republic of China)? Does consumer-led expansion lead to greater consumer awareness, more deeply-rooted skills and faster lifestyle changes? In fact, case studies show that both models seem successful, given the structural characteristics of the market. In order to identify factors that have contributed to the successful uptake of ICTs, the experiences of four countries that have been successful in promoting ICT development are examined.


3

The report considers the growth of the Internet in China and Egypt, developments in mobile Internet in the Republic of Korea and rapid growth in mobile phones in the Czech Republic to identify key factors underlying progress. Despite different characteristics of the market in each country, it concludes that in each case, a successful compromise was achieved (in some cases, negotiated) between the stakeholders. In some cases, key players worked together in the common interest. In other countries, particular agents or institutions had particular strength. In the Republic of Korea, the government took the lead in promoting development of the Internet. In China, where the government was more cautious in its approach to ICTs, Internet development has been largely consumer-led with rising incomes leading to an explosion in demand for ICTs. In Egypt, a dynamic Ministry of Communications and Information Technology played a strong role in catalyzing telecommunications development in collaboration with the private sector, emphasizing the importance of public-private partnerships. It is hoped that the experiences of these countries will be instructive in helping policy-makers decide upon priorities for their country. In view of evidence that Africa is still not keeping up with other countries in ICT diffusion, the report also reviews practical on-the-ground programmes and applications that are being developed in Africa to respond to communities’ needs for expanding access to ICTs and telecommunications. It considers the use of Universal Access Funds and the experience of Uganda in establishing a collective fund to build the network infrastructure for telecommunications. The importance of ICT policies and the market supply-side are often emphasized to the neglect of underlying demand, which is often assumed to exist and to be constrained only by effective purchasing power. Constraints upon demand are often addressed only in passing. The report therefore considers efforts to build demand for ICTs and IT skills through community telecenters. It examines the experience of Egypt in establishing its IT Clubs to extend access and basic IT training to a wider range of customers and communities. The importance of developing relevant content and applications suited to the needs of local populations is discussed for Mali. Local content is essential in order to take ICT applications in new directions, to make them more directly relevant to end-consumers and to build the demand for their uptake. Mali’s experience in adapting and using ICTs in a range of fields, including education, telemedicine and the promotion of tourism and arts and crafts illustrates how ICTs can be used to improve people’s standards of living. It is hoped that this report will prove a valuable resource in understanding the importance and relevance of benchmarking ICT development for policy-making. Policy tools and programmes that are being used to promote widespread access to telecommunications, such as Universal Access Funds and Community Access Centres, have been examined and their contribution to the successful uptake of these programmes has been established. The experiences of some countries with promising programmes should prove helpful to others in formulating their policy decisions. Finally, proactive policies are needed to ensure effective utilization of ICTs, focusing on bridging the gaps in opportunities for those with limited access to technology. It is hoped that this report will contribute towards more effective policy decision-making and dissemination of best practice, leading towards more rapid diffusion of ICTs.


4

This publication complements other work carried out by UNCTAD in the field of ICT for Development. The annual E-Commerce and Development Report provides data and analyses on the impact of ICT on economic growth, enterprise development and trade competitiveness in developing countries, providing policy makers with an analytical and empirical basis for taking the appropriate decisions in the field of ICT and e-business at the national level. The global Partnership on Measuring ICT for Development, which was launched at the occasion of UNCTAD XI in Sao Paulo, Brazil (June 2004), aims to assist developing countries in their production of comparable ICT statistics for monitoring ICT developments and assessing national ICT policies and strategies. The members of the Partnership1 recently organized a WSIS Thematic Meeting on Measuring the Information Society (Geneva, 7-9 February 2005). The main outcome of this Thematic Meeting was an agreed upon core list of ICT indicators comparable at the international level, which could be collected by all countries. Such internationally agreed indicators and definitions could be used as a basis for data collection to increase comparability between countries.

1 Members as of February 2005 include the ITU, OECD, UNCTAD, UNESCO Institute for Statistics, UN Regional Commissions (ECA, ECLAC, ESCAP, ESCWA), the UN ICT Task Force, the World Bank and Eurostat,


5

1. BENCHMARKING ICT DEVELOPMENT 1.1 2002 ICT Development Indices The ICT Development Indices have been compiled on the basis of measures of connectivity, access and policy. This section analyses ICT diffusion for 2001-2002. Consistent with analyses by the ITU and World Bank, the top thirty places are dominated by OECD and high-income countries (see Annex Table A.1.) The United States ranks first, with the other top ten countries all European except for Singapore, which has broken into the top ten, rising from 12 to 9. The ITU Internet case study of Singapore (2001) suggests that this is due to a total commitment by the Government to becoming the ‘most wired place’ on earth. Australia maintains its ranking of 10, while Hong Kong, China, slips marginally from 11 to 12. The Republic of Korea (see ‘Some Success Stories’ in Chapter 4), the other South East Asian star performer, rockets up the rankings from 22 to 14. Japan now trails the Republic of Korea at 17. The highest-ranking Arab country is the United Arab Emirates at 20, while high-ranking island states are Malta (32nd place) and Barbados (34th place). The highest-ranking transition economy is Slovenia at 23, while the Czech Republic has risen fast up the rankings from 44 to 35 (see Chapter 4). Table 1: Analysis of ICT Diffusion by income

Index of ICT Diffusion

1995 1999 2000 2001 2002

High income: Best

Worst Average

Finland 1

Bahamas 46 21

USA 1

Bahamas 57 19

USA 1

Bahamas 60 20

USA 1

Kuwait 48 19

USA 1

Kuwait 42 18

Middle income: Best

Worst Average

Lithuania 30 Egypt 154

81

Estonia 32

Micronesia 169 82

Estonia 32

Vanuatu 162 81

Malta 31

Vanuatu 160 80

Estonia 29

Vanuatu 162 80

Low income: Best

Worst Average

Vietnam 61 CAR 156

120

Myanmar 61

CAR 168 131

Moldova 77

CAR 170 136

Moldova 84 Guinea B166

131

Moldova 78 Guinea B165

131 Table 1 confirms the strongly established relationship between the level of telecommunications development and level of incomes. High-income countries dominate the upper ranks of ICT diffusion, ranging from first place (USA) to 42 (Kuwait), with an average ranking of 18 in 2002. Rankings decline with income, as shown by the average rank declines for middle income countries (average ranking 80 in 2002) and for lower income countries (average ranking 131 in 2002). Table 1 suggests increasing polarization over time, with the average ranking of high-income countries improving from 21 in 1995 to 18 in 2002. The average ranking of middle-income countries remains stable at around 80, while the average ranking of lower-income countries remains around 131. Beyond 35th place, the dominance of Western Europe and the OECD countries ceases to hold sway and a more varied range of countries appears. Between 35th and 55th ranks, Arab states (such as Qatar at 36 and Bahrain at 39), transition economies (Hungary at 37 and Croatia at 38, trailed by Poland at 54) and other Asian states


6

(Malaysia at 41) enter the rankings. The highest-ranking South Asian state is the Maldives at 50. The highest-ranking Latin American countries also appear, with Suriname at 43 and Chile at 46, followed by Costa Rica at 51 and Argentina at 53. The more developed African countries enter the rankings, with Mauritius at 52 and South Africa at 66. From 55th to 100th place, there is a mixed mosaic of countries comprising mainly CIS (such as Belarus at 55, Kazakhstan at 71 and Armenia at 81) and Latin American countries (Brazil at 57, Venezuela at 63, Paraguay at 86 and Peru at 88). Russia trails behind its sister states at 94. There are some South Asian states, notably Iran at 84 and Sri Lanka at 97. Other Arab countries also belong to this mid-ranking range, with Oman at 62, Lebanon at 64, Jordan at 75 and Tunisia at 95. Star performers from sub-Saharan Africa appear, such as Botswana in 80th place and Cape Verde at 87. Beyond Indonesia at 100th place, Sub-Saharan countries begin to dominate the rankings, with Swaziland at 107, Gabon at 108, Guinea at 109, Kenya at 115 and Ghana at 116. The People’s Republic of China has rocketed up the rankings 16 places to rank at 118. Other large developing countries include Egypt at 112 and India at 121. One important point to note is that these rankings do not necessarily reflect achievements in specific areas. An important result of using per capita measures is that notable ‘islands of achievement’ in ICTs are averaged over large populations to yield rankings that are lower than one might otherwise expect. This is one characteristic of aggregate rankings that the current study seeks to address through case studies of some of the more notable success stories, including Egypt and the People’s Republic of China (see Chapter 4). Lower-performing countries in South Asia and Africa dominate the lower half of the rankings. Bolivia and El Salvador trail the rest of Latin America at 141 and 148 respectively. Haiti is the lowest-performing Caribbean country at 164. In the CIS, Georgia lies at 126 and Turkmenistan at 130, while Kyrgyzstan is included in the rankings for the first time at 151. Lower-ranked Arab countries include Yemen at 136, Morocco at 137 and Djibouti at 147. Nepal and Bangladesh trail other South Asian countries in 142 and 145 places respectively. However, Sub-Saharan African countries dominate the lower rankings, including Tanzania at 135, Ethiopia at 146, Senegal at 149, Uganda at 154, Mali at 157 and Nigeria at 161. This presents one aspect to the digital divide that, as a region, Africa still has a considerable way to go in connectivity and ICT diffusion to hold its own with other regions. One central finding of the 2003 ICT Development Indices Report was the remarkable stability in rankings year on year, reflecting the long-term nature of investments in ICT infrastructure, literacy and access. The 2004 Indices also show that rankings in ICT diffusion for 2002 are stable and closely resemble 2001. 1.2 Comparison with 1995 There is considerable stability in many countries’ rankings in a comparison over a longer time period to 1995 (see Annex Table A.2). Many countries’ rankings remain roughly the same. However, some countries made radical changes with large jumps up the rankings or declines over this longer time period.


7

Countries that made only marginal movements in ICT development and remain the same over 1995-2002 include the United States (which progresses from 2nd place to 1st place in the overall rankings) and several other OECD countries in the top thirty rankings (Hong Kong, U.K., Japan, Israel, Italy). This supports the finding that the countries with strong telecommunications development are maintaining their lead and building on their advantages. Other countries showing remarkable stability in rankings over this timescale include: Argentina (around 53); Belarus (unchanged at 55); South Africa (around 66); Columbia (which slips only slightly from 70 to 72); Ecuador (stable at 83); Russia (small progression from 98 to 94); Indonesia (stable at 100); Syria (around 104); Georgia (around 126); Burundi (at 140); and Ethiopia (unchanged at 146). This stability in the index rankings supports the idea that these Indices measure consistent underlying ICT development. Despite this overall stability, there are some countries that made a considerable change from 1995-2002. Table 2 presents countries that have made considerable progress in ICT diffusion over the period 1995-2002. Table 2: Major gainers in ICT diffusion rankings, 1995-2002

Country 1995 2002 Change Mongolia 159 89 +70 Uzbekistán 142 92 +50 Sierra Leone 150 103 +47 Mexico 116 73 +43 Egypt * 154 112 +42 Armenia 121 81 +40 Slovak Republic 92 56 +36 Maldives 86 50 +36 China * 147 118 +29 Czech Republic * 60 35 +25 Chile 67 46 +21 Brazil 78 57 +21 Botswana 97 80 +17 Swaziland 122 107 +15 Thailand 79 65 +14 Tunisia 109 95 +14 Republic of Korea * 26 14 +12 Saudi Arabia 72 60 +12 Ghana 128 116 +12 Central African Republic 156 144 +12 Malaysia 51 41 +10

* See Chapter 4. For more information on the success these countries have achieved. Source: ICT Development Indices, UNCTAD. Given the importance of promoting ICT development for gains in the knowledge economy and new economic activities, the different experiences of four countries (China, Czech Republic, Egypt and Republic of Korea) that achieved major gains in ICT diffusion are reviewed in Chapter 4 to identify some of the factors that have contributed to their successful uptake of ICTs. Chapter 4 examines the spread of the Internet in China and Egypt, developments in mobile Internet in the Republic of Korea and the rapid growth of mobile phones in the Czech Republic.


8

Table 3 shows that countries that experienced a considerable decline in ranking in ICT diffusion over 1995-2002 are also mixed, although they mainly comprise African countries: Table 3: Major declines in ICT diffusion rankings, 1995-2002

Country 1995 2002 El Salvador 49 148 Lesotho 64 117 Tanzania 76 135 Madagascar 80 131 Malawi 88 138 Rwanda 89 134 Paraguay 42 86 Cameroon 81 122 Vietnam 61 99 Bangladesh 107 145 Yemen 102 136 Djibouti 113 147 Sudan 99 129 Angola 114 143 Mali 132 157 Cape Verde 63 87 Cuba 45 69 Albania 104 127 Burkina Faso 140 159 Cote d’Ivoire 141 158 Chad 138 155 Cambodia 105 119 Uganda 144 154

Source: ICT Development Indices, UNCTAD. It is important to note that while large declines in rankings often represent a deterioration in indicators (e.g. growth in telecommunications infrastructure does not keep pace with rapid growth in population, resulting in a decline in relative per capita measures and a decline in rankings), small declines may not always reflect deterioration in absolute ICT development. Rather, small declines are often attributable to ‘neighbourhood effects’, whereby neighbouring countries in the rankings improve faster than some others, which are effectively ‘running to stand still’ in the rankings. 1.3 Regional Performance, 1995 - 2002 170 countries were classified using the UNDP regional groupings into regions of Eastern Europe and CIS, OECD, Arab states, East Asia, South Asia, Latin America and Caribbean, Sub-Saharan Africa and ‘others’. The ICT diffusion rankings are:


9

Table 4: Analysis of ICT Diffusion rankings by regional groupings

Index of ICT Diffusion

1995 1999 2000 2001 2002

1.OECD: Best

Worst Average

Finland 1

Mexico 116 27

USA 1

Mexico 76 23

USA 1

Mexico 79 24

USA 1

Mexico 71 22

USA 1

Mexico 73 23

2.EE&CIS: Best

Worst Average

Slovenia 27

Uzbekistan142 78

Slovenia 25

Azerbaijan164 80

Slovenia 26

Turkmenistan129 84

Slovenia 27 Albania 148

86

Slovenia 23 Kyrgyz. 151

82 3.LAC:

Best Worst

Average

Guyana 41 Bolivia 146

81

Barbados 36

Haiti 165 80

Barbados 39

Haiti 167 77

Barbados 41

Haïti 165 78

Barbados 34

Haïti 164 80

4. E.Asia: Best

Worst Average

Hong Kong 11 Mongolia 153

75

Hong Kong 8

Micronesia 169 94

Singapore 10 Vanuatu 162

95

Hong Kong 11 Vanuatu 160

87

Singapore 9 Vanuatu 162

88 5. Arab states:

Best Worst

Average

Kuwait 31 Egypt 154

89

U.A.E 27

Djibouti 141 86

U.A.E 23

Djibouti 160 90

U.A.E 26

Djibouti 141 87

U.A.E 20

Djibouti 147 88

6.S. Asia: Best

Worst Average

Maldives 86 Nepal 137

112

Maldives 52 Banglad. 137

107

Maldives 55 Bhutan 168

120

Maldives 56 Bhutan 167

120

Maldives 50

Bangladesh 145 107

7. SSA: Best

Worst Average

Mauritius 39

CAR 156 117

Mauritius 51

CAR 168 132

Seychelles 38

CAR 170 131

Seychelles 36 Guinea-B 166

126

Mauritius 52

Guinea-B 165 130

Average rankings conform to expectations. OECD countries capture the top rankings, with average ranking improving from 27 to 23 from 1995-2002. Eastern Europe and CIS’ average ranking declines from 78 to 82 over this period. Latin American and Caribbean countries have a steady average ranking around 80. ‘East Asian countries’ is a diverse category, including Asian Tigers and Pacific countries such as Micronesia and Asian countries such as Mongolia. East Asia shows some decline in average ranking over 1995-2002 from 75 to 88. Arab countries are also diverse, with countries that are making progress in ICT diffusion (e.g. UAE and Kuwait) and countries that are left behind, such as Djibouti. Overall, Arab countries’ average ranking is stable from 1995-2002 at 88. South Asia’s average ranking improves from 112 in 1995 to 107 in 2002. Sub-Saharan Africa’s average ranking is last and declines from 117 to 130 from 1995-2002. However, Mauritius and Seychelles are highly placed at 52 in 2002 and 36 in 2001, as the region’s best performers.


10

2. THE DIGITAL DIVIDE Uneven diffusion of technology and inequality in access to technologies are evident in different ways with significant consequences for social, economic and political development. These consequences are reflected in the fact that concern over the digital divide now focuses on resulting ‘digital exclusion’. ‘Digital exclusion’ extends the idea of digital divides based on connectivity and access to emphasize ideas of exclusion or lack of participation and representation in more advanced ICTs. The digital divide has been analysed using ratios of average per capita penetrations of hardware in developed and developing countries (‘Bridging the Digital Divide’, ITU 2004). However, this analysis is based on averages in the categories of developed and developing countries, so the ITU’s conclusion that the digital divide is shrinking depends upon the classification of countries used. Further, it does not take into account the size of the underlying populations involved and the greater absolute numbers of people with more limited access to ICTs in developing countries, and ignores strong evidence that digital divide is differentiated by the form of technology (UNCTAD, 2003). Gini coefficients and Lorenz curves (widely used to measure income inequality) are a better way of analysing inequality to measure the digital divide. They assess inequality in the distributions of ICT hardware and Internet users across countries, adopting the country as the base unit of analysis. Gini coefficients compare cumulative shares of Internet users and ICT hardware relative to the cumulative share of the world’s population. This is more appropriate, as it uses individual countries as its basis for measurement and also takes into account the size of population in each country in its measurement of inequality. Table 5 presents Gini coefficients of inequality in levels of ICT hardware and users across countries, analysing trends in the evolution of the digital divide over the period 1995 to 2002: Table 5: Gini coefficients 1995–2002 (figures in brackets are number of countries)

Variables

1995 1999 2000 2001 2002

Telephone Mainlines

0.688 (200)

0.614 (202)

0.592 (202)

0.567 (200)

0.551 (188)

Mobile subscribers

0.822 (195)

0.735 (200)

0.703 (198)

0.655 (196)

0.609 (194)

Internet hosts 0.910 (199)

0.913 (201)

0.916 (201)

0.915 (201)

0.913 (204)

PCs 0.791 (110)

0.764 (161)

0.754 (161)

0.747 (162)

0.730 (170)

Internet users 0.871 (136)

0.786 (196)

0.757 (194)

0.735 (194)

0.671 (187)

The results show that Gini coefficients for all ICTs remain high: between 0.55-0.91, around twice the average level of income inequality generally observed. Inequality in access to ICTs across countries remains high and significant. Further, trends in the digital divide are sharply different according to the type of technology. Gini coefficients for Internet technologies (in Internet hosts, PCs and Internet users) show very high concentrations and substantial inequality in their distribution and are


11

generally only reducing slowly. Mobile telephony shows a sharp reduction in inequality and strong gains in more widespread access worldwide. Mainline telephony, the oldest technology, shows small but steady reductions in inequality. Trends in the digital divide vary according to the type of technology. 2.1 Telephone mainlines Fixed-line telephones are the most evenly distributed form of communications technology, as the oldest technology analysed here. The ITU notes that since 2000, Africa has gained a larger number of ICT users than the total number of mainlines installed throughout the preceding century (ITU Telecoms Africa 2004 conference). This is at least partly due to policy trends towards privatization and greater private sector participation. Despite 60 per cent of the world’s telephone lines being available to 20 per cent of total population in 2002, mainline telephones remain the most evenly diffused form of communications technology. In 1995, fixed line was the only technology with a Gini coefficient under 0.7 (at 0.688; all other ICTs measured have coefficients above 0.79). The Gini coefficient for mainlines of 0.688 reduces slowly but steadily to 0.551 in 2002, as the only technology with a Gini coefficient of under 0.6. Further, while dial-up remains the most widespread form of Internet access, mainlines remain a common means of accessing the Internet. Rapid gains in mobile technology made by Africa and other developing countries may overcome infrastructural barriers to access to telecommunications, but do not necessarily advantage these countries in more advanced forms of accessing the Internet. Mainline telephones are likely to continue to remain important for the near future. Figure 1: Trends in the Lorenz curve for mainline telephones, 1995-2002

2.2 Mobile subscribers Mobile telephones show the sharpest reduction in inequality and strongest gains in access. The distribution of mobiles across countries shows considerably more equal

Lorenz curve for Mainlines

0

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100 Per Cent Cumulative Share Population

Per

Cen

t C

um

ula

tive

Sh

are

Mai

nlin

es 2002

1995


12

access to mobiles in the ‘leap-frogging’ and catch-up noted by many observers. The Gini coefficient decreases strongly from 0.822 in 1995 to 0.703 in 2000 and continues to decline strongly to just 0.609 in 2002. The more even distribution of mobile telephones suggests greater access to mobile communications in developing countries. Mobile phones are an important ‘leader technology’ where challenging geography prevents access with mainline infrastructure to remote regions. Rapid diffusion of mobiles may be partly due to greater private involvement in mobile provision. However, gains in more even diffusion of mobile phones do not reflect differences in types of usage. In developed countries, mobile handsets are developing into multi-media devices capable of delivering email, photographs and the real-time exchange of information. In developing countries, the reality may be very different, with shared or collective access and widespread use of ‘beeping’ (to notify recipients of a missed call so they can call back). Users in different countries and cultures are finding their own ways to use new technologies. However, these different types of usage are not reflected in the statistics, which record only the number of mobile phone subscribers. Figure 2: Trends in the Lorenz curve for mobile phones, 1995-2002

2.3 Internet hosts Changes in the distribution of Internet hosts across countries indicate that until 2000, this important base technology for Internet access was becoming more unevenly distributed, with a Gini coefficient rising from 0.910 in 1995 to 0.916 in 2000, reflecting growing concentration of Internet hosts in OECD countries and the U.S. in particular. Press (1999) notes that in 1999, OECD nations owned 93 per cent of Internet hosts. In 2002, 10 per cent of the world’s population owns over 90 per cent of Internet hosts. Declines in the concentration and inequality of distribution of this essential Internet base technology to 0.913 in 2002 have been negligible. Although the distribution of Internet hosts may not directly affect content (insofar as Internet content is now evolving independently of the physical location of infrastructure) the

Lorenz curve for mobiles

0

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100

Per Cent Cumulative Share Population

Per

Cen

t C

um

ula

tive

Sh

are

Mo

bile

s 2002

1995


13

location of Internet hosts is still likely to have important consequences for the content and languages used in the Internet. Figure 3: Trends in the Lorenz curve for Internet hosts, 1995-2002

2.4 Personal computers Similar to Internet hosts, the distribution of PCs remains highly uneven. Around 20 per cent of the world’s population had access to 80 per cent of PCs in 2002. Changes in the relative distribution of PCs across countries indicate only slow and small reductions in the inequality of distribution of this important technology, essential for the development of ICT skills and more advanced forms of ICT usage. The Gini coefficient of the distribution of PCs across countries decreases from 0.791 in 1995 to 0.764 in 1999 and 0.730 in 2002. This shows declining inequality, but at a very slow rate. Declines in inequality in the distribution of this essential technology are only marginal and signal important gaps in the development of ICT skills and more advanced forms of ICT usage for the future.

Lorenz curve for Internet Hosts

0

10

20

30

40

50

60

70

80

90

100


Per

Cen

t C

um

ula

tive

Sh

are

Inte

rnet

2002

1995


14

Figure 4: Trends in the Lorenz curve for PCs 1995-2002

2.5 Internet Users Contrary to the trends in Internet hosts and PCs, the distribution of Internet users suggests strong gains in access to the Internet across countries. The Gini coefficient decreases from 0.871 in 1995 to 0.671 in 2002, with an especially strong reduction from 2001-2002. In 2002, around 80 per cent of Internet users were still accounted for by 20 per cent of world population. More widespread distribution of Internet users offers hope of an expansion of Internet access outside advanced countries and in developing countries in particular. In the absence of significant gains in inequality of distribution of physical hardware, this suggests that gains in Internet access are mostly through forms of shared access. This makes policy initiatives such as community telecenters and shared public points of access even more important. However, numbers of Internet users are estimates. The number of Internet subscribers for a country is multiplied by an estimated ratio to estimate the number of Internet users. In Arab countries, there are an estimated 2.5-3 Internet users per subscriber account except for Jordan (6 users per account), Egypt (8 users per account) and Iraq (25 users per account) (Nua surveys, Insight research, 2000, quoted in American Chamber of Commerce ‘IT in Egypt’ Report, 2003). These assumed estimation ratios reflect different types of access, with Internet access more personal and individualized in the Gulf states, in contrast to more widespread forms of shared access, for example through IT Clubs in Egypt (Chapter 5) or Publinets, publicly supported Internet access points, in Tunisia. Most of the gains in Internet usage derive from more populous developing countries in the middle of the distribution. China increased its share of Internet users from just 3.7 per cent in 1999 to nearly 10 per cent of the world’s population of Internet users in 2002. This accounts for the upwards shift of the Lorenz curve in the middle of the distribution in Figure 5 and strongly contributes to the reduction in the Gini coefficient. However, the distribution of Internet users does not indicate how the

Lorenz curve for PCs

0

20

40

60

80

100


Per

Cen

t C

um

ula

tive

Sh

are

PC

s 2002

1995


15

Internet is being used, which is an important added dimension to the digital divide not captured here. Figure 5: Trends in the Lorenz curve for Internet users, 1995-2002

Lorenz curve for Internet users

0

20

40

60

80

100


Per

Cen

t C

um

ula

tive

Sh

are

Inte

rnet

2002

1995


16

3. ICT POLICIES Following the benchmarking of ICT development in the first chapter, which policies can be used to promote ICT development? The OECD has conducted a survey of member countries using an IT policy questionnaire with a comprehensive summary of policies and programmes among members. The OECD divides policies into:

(i) IT policies to encourage the development, diffusion and use of ICTs (with a positive emphasis on spreading ICTs among the population); and

(ii) Policies to address the digital divide (with an emphasis on addressing any remaining inequality or deficiencies in access to ICTs between different communities, cultures, ethnicities).

This chapter summarizes policies identified by the OECD.2 These policies are useful and relevant to developing countries as they provide a preview of examples of leading policies that are currently being implemented in advanced countries, with which developing countries will ultimately have to contend with if they are to remain competitive in the global markets for ICTs. OECD countries are taking the initiative on a range of ICT policies across several categories, including:

a) General policy vision, and policies on the ICT environment; b) Network infrastructure; c) Technology development; d) Technology diffusion; e) Diffusion to businesses; f) IT skills, education and training initiatives; g) Globalization and international cooperation.

These different policies for ICTs show how promoting ICT development needs action across a range of policy domains. Coordinated policy initiatives are needed across different areas to build the local capabilities to master and adapt these fast-changing technologies. Becoming competitive in ICTs needs effort to develop a range of local capabilities in infrastructure, skills, research and the diffusion and the development of business services. A central body may be needed to coordinate and oversee all policy issues driving competitiveness centrally, to ensure policy coherence across different policy domains and to make sure that efforts in some fields are not held up by bottlenecks in other areas. For this reason, several countries have established high-level task forces charged with monitoring and overseeing the implementation of policies for ICTs, such as the ICT taskforce in Australia and the National Information Technology Council in Malaysia. These Task Forces often build on principles of public-private partnership and collaboration between government and the private sector, to ensure that policy-making can respond quickly to firms’ needs and concerns. These central bodies focus attention on ICTs, analyse trends in ICT development, identify gaps and/or priorities for action and make recommendations for urgent action to boost and maintain countries’ performance in ICTs and their international competitiveness. They are often supposed to be independent (although the ITU notes that in practice, this is difficult to achieve, as these bodies are the products of the political, social, legal and

2 Abridged from the OECD Information Technology Outlook, 2002.


17

economic conditions in each country). The nature of these bodies as private or public partnerships may impact on the compromise policy mix reached, although research in this area is relatively limited to date. In fact, the policy mix is more likely to differ between industrialized and OECD countries and developing countries. It is noticeable that OECD policies emphasize innovation, Research and Development (R&D) and access for specific groups with special needs. Many OECD countries (Sweden, Norway, Canada and the US) make use of applied industry solutions with the collaboration of the private sector in R&D, training and apprenticeship programmes and adapting school curricula, as well as policies on the immigration of skilled labour. Most of these policies are relevant to developing countries, but their policy mix differs according to their priorities. For example, developing countries may prioritize resources and funding solutions with a focus on increasing connectivity, expanding ICT access across the general population, training and retaining skilled labour. To illustrate the range of policies and the policy mix for developing countries, policies are illustrated with reference to developing countries in Table 6 (based on the Internet case studies from the ITU). This is to show that developing countries can, and are, addressing a range of ICT policies on different fronts, and are experimenting with best practice to find their own working model and policy mix. They need to find a policy mix that suits their needs, which will not be the same as OECD priorities. In fact, there is some indication that demand-oriented policies to raise awareness of ICTs and their usefulness are especially relevant in developing countries. Often, the general assumption is made that demand exists, and is constrained only by purchasing power. In fact, given limited resources of consumers in these countries, policies to publicize and demonstrate the practical usefulness of ICT services take on added importance to encourage consumers to use ICTs. Public access and ‘Computer for Every Home’ initiatives are vital in raising awareness and encouraging the take-up of ICTs. The impact of ICT policies will be maximized if policies are implemented in a coordinated way across a range of categories, rather than over-emphasizing any one of these areas to the neglect of others. This has implications for sequencing, and allows synergies to develop: for example, training up skilled labour improves the capacity of these staff to carry out R&D, which in turn develops their skills and enables them to train others. Virtuous, self-reinforcing cycles are established between different policy areas. Some developing countries (such as Egypt) have been successful in this respect, taking action on a range of different issues in conjunction to successfully promote their ICT development with tangible results (see ‘success stories’ in Chapter 4). Table 6 gives examples of different ICT policies in some OECD countries and some developing countries.

Table 6: Policies to promote ICT development, with OECD examples (OECD 2002, abridged). Examples in developing countries A) General policy vision and policies on the ICT environment 1. Government policy and vision for ICTs, including: citizenship and citizens’ rights; universal access; education; business and the ICT sector; e-commerce; ICT skills and training; proprietary rights; censorship; latest developments in the knowledge economy and IT policy environment; broadband access and policies for software sector (Norway, Canada, Mexico, Korea, Singapore)

National ICT Plan (Egypt, Philippines); ICT Policy (Uganda); National IT Agenda (Malaysia, 1996); National IT Policy Committee (Nepal).

2. Electronic transactions: measures for electronic settlement, authentication, e-signature (Czech Rep; Rep. of Korea); security, privacy protection, consumer protection; ‘soft trust’ issues (the Internet Watch Foundation in the UK).

E-Signature Law (Egypt); E-Commerce Act (Philippines) E-Commerce Committee and Digital Signature Act (Malaysia); Bolivia lacking in 2000.

3. Intellectual property rights: to create clear and enforceable mechanisms for IP, licensing and dissemination by owners of technology; use of authorized software and services (US, UK, Japan).

Intellectual Property Rights Laws (Egypt, 2002).

4. Standards and IT certification (e.g. Finland, Canada). National Institute (Egypt); lack of standards (Nepal). B) Network infrastructure 1. To create a strong, vibrant telecoms sector: empowerment of the regulator and regulatory incentives; measures to enhance competition within the telecommunications sector; privatization, licensing, franchising (Thailand); national ownership limits (Republic of Korea allowed 49 per cent FDI)

Independent regulatory agencies (Egypt, Bolivia). Connectivity in Multimedia Super Corridor (Malaysia); IT Smart Village (Egypt); IT ecozones (Philippines).

2. Basic infrastructure development: extending network coverage; increasing capacity (quantity); digitizing the network, unbundling the local loop (quality); increasing range of services.

Masterplans (Egypt); National Plan (2001/5) gives 5 per cent budget to ICTs (Malaysia).

3. Further support for broadband infrastructure development as an advanced technology and important facilitator of further access (Rep. of Korea, Singapore).

Broadband Strategy (Egypt, 2004); Multimedia Super Corridor (Malaysia).

C) Technology development 1. R&D Programmes: increase R&D budget allocated to ICTs (France); strengthen links of public research institutions with industry (France, Sweden); high-speed backbone for research institutions (Poland and Portugal); focus on ICTs: telecoms (Slovak Rep), e-health (Greece); e-teaching (Italy), home appliances (Japan), software (Switzerland), ICT Centre of Excellence (Australia).

Intentions to support IT-related R&D and create an IT Park (Nepal, 2000); IT Smart Village (Egypt); Multimedia Super Corridor (Malaysia).

2. ICTs for government use: inter-departmental technical standards to ensure compatibility, development of central infrastructure (central platform, portal and servers), electronic identity; electronic security (Singapore); integrating state databases; set up government portal (Czech Rep).

E-Government Programme (Egypt, Malaysia), Government Info Systems Plan (Philippines).

3. Government procurement of ICT goods: to develop ICT supply capabilities in certain industries and to procure ICT goods at lower prices and promote e-procurement (Czech Rep., Italy).

Egypt: E-government programme with Microsoft and other providers.

4. Venture finance for high-tech start-ups and SMEs. IT Venture Investment (Korea), ICT SMEs Industry Development Fund (Egypt).

19

(Australia), risk capital funds for SMEs (Mexico); contacts for ICT firms and risk capital (Belgium). D) Technology diffusion 1. Diffusion to individuals and households: measures for connectivity (Hungary); price limits (Spain); grants and subsidies (UK); market mechanisms and private sector plans (Finland, Sweden).

Abolition of subscription charges (Egypt, 2002); "Ordinateur Familial" programme in Tunisia.

2. Diffusion to businesses, to provide information and promote e-commerce; public-private partnerships (Czech State Information Policy); financial and fiscal incentives to promote ICT use.

Public-private working groups (Egypt); Multimedia Super Corridor (Malaysia); Computer Association Nepal

3. ICTs in education and access to schools: ‘Internet into Schools’ programme (Czech Rep.); ‘School on the Web’ (Switzerland); Singapore and Republic of Korea.

PCs for Schools (Philippines); Smart Schools (Egypt) lack of plans (Uganda, Bolivia, Laos, Nepal, Vietnam).

4. Online government services: government as a model user, procurer, provider of online information and services (Singapore, Czech Rep., UK); e-citizen programmes.

e-government programmes deliver online services to the public in Egypt, Malaysia, Philippines.

5. Access through other public institutions (e.g. libraries, universities) and public-private collaboration (e.g. community centres and IT Clubs).

IT Club programme (Egypt).

6. Access for rural/low income areas, as separate programmes, or incorporated within plan for and measures to promote universal access by the regulator (Uganda, Nepal, Malaysia, Peru).

Fund for telecentres (Uganda, Chile); Universal Service Fund (Uganda, Egypt); rural licences (Philippines).

7. IT for special needs groups: overall, including women (Norway); disabilities (Portugal, Sweden, Spain); young people (Norway); senior citizens (Belgium, Norway); unemployed (Italy, Sweden); civil servants (Portugal, Italy, Austria); rural areas (Spain); community learning centres (Hungary).

IT Clubs programme (Egypt); delivery to rural areas (regulator in Bolivia); underprivileged children (NGOs in India); mobile ICT buses (Malaysia).

8. Measures to promote access for SMEs and content for their needs (Norway, Sweden). 9. Measures to create content to stimulate use of ICTs and the Internet. IT clubs offer training courses (Egypt). 10. Measures to lower the costs of IT. Ministries negotiate for bulk capacity rates (in Egypt). 11. Demonstration programmes: programmes to increase demand for ICTs; programmes to demonstrate new applications and use of e-marketplaces; awareness-raising programmes (sharing of success stories and experiences).

Computer for Every Home to stimulate demand and strengthen domestic manufacture (Egypt); Multimedia Super Corridor (Malaysia); IT ecozones (Philippines).

12. Financing and subsidies of IT equipment and/or services. E) Diffusion to businesses 1. Support and training for SMEs: - IT competence programme for small firms (Sweden); Small firm training loans (UK); website for SMEs for every stage of lifecycle (Switzerland); programme focusing on SMEs and e-commerce (Norway); Information for IT skills for SMEs (Sweden).

SMEPol at the Ministry of Trade (Egypt); SME support programmes (Mali, Uganda, Tanzania, Nepal).

2. Information, market research and other business development services, e.g. trade databases, portals for matchmaking buyers and suppliers (Czech Rep., UK); exchange of information, contacts; Knowledge carrier programme (Netherlands).

Industrial Product Information System and Trade Information Network (Egypt). Multimedia Super Corridor (Malaysia).

3. Assistance for regions and rural areas: Networking the Nation initiatives (Australia, Canada); Regulator’s plans for universal access to remote areas;

20

regulatory plans for universal access (Czech Rep.), universal access funds, financed out of licence fees (Malaysia); telecottages programme to connect remote villages (Hungary); Regional Development Agencies (UK); Rural Telecommunications Funds (Uganda, Rwanda).

Governorates Administrative Project (Egypt).

F) IT skills, education and training initiatives 1. Coordinating mechanisms for IT skills: surveys using standard skill definitions, skills audits to measure skills shortages; coordinating mechanisms (IT Skills Hub, ICT Taskforce in Australia; Software Human Resource Council in Canada); Information portals (Australian IT Skills Hub). Schemes for employment assistance and labour market information (Belgium, Australia, Canada).

Egypt: Labour monitored by the Ministry of Labour and Manpower: 18,000 ICT professionals trained to date; ICT workforce 33,000 in 2003.

2. IT education in schools: low-cost access to schools; training teachers in methods & technologies; work experience in IT firms (US); IT certification for teachers (Competency Standards in Australia); increasing content of IT in curricula (U.S.); relevant content (UK, Australia, Czech Rep).

Smart Schools Network (Egypt); “Training of Trainers” for IT Clubs (Egypt); ‘Enlaces’ connected 6,000 schools (Chile); WorLD project (Brazil, Chile, Peru, Paraguay).

3. Programmes targeting students: financial support to students and schools specializing in IT (Republic of Korea); programmes to increase numbers of students in IT (Sweden, Finland and IT4U in Austria); programmes to establish stronger links between industry and education (Science Lectureship Initiative in Australia; e-commerce research centres at universities); IT internships (Canada, U.S.); adapting curricula to industry needs (Spain); E-business degrees (Ireland); IT University (Sweden).

Smart Schools Network, IT Clubs, Basic Training Programme (Egypt); University courses in technology (Egypt, Nepal, India, China); partnerships between universities and ISPs to set up Internet cafes on campus (Philippines).

4. Vocational training for current & potential workers: training for ICT professionals (from payroll taxes - Spain, Belgium, Italy; also Sweden, Finland, UK, Austria); programmes for retraining, skills and lifelong learning (Italy, Poland, Norway, Austria, Greece); E-business management accreditation scheme (Belgium), SME IT-skills programme (Sweden); apprenticeship programme with industry partners (Canada); internship programme (U.S.); ‘on-the-job’ training (Greece).

PPP training in the Professional Training Program; Vocational Education Program (Egypt); IT training centres (Philippines); Networking Academies set up with Cisco (Philippines); National Institute of IT offers training (India).

4. IT certification: National Council of Accreditation in Informatics and Computers (Mexico); IT Engineers Exam & IT Coordinator certification (Japan); Public Employment Service (Austria); programmes to define specific sets of ICT skills (Employability Skills 2000+ in Australia, Poland and Canada; Skill standard in Japan); International Computer Driving Licence in OECD Countries

Basic Training Programme to obtain International Computer Driving Licence (Egypt).

5. Funds for training: scholarships and student loans (e.g. career development loans in UK); training incentives, tax credits, loan subsidies and direct grants (US).

Training programmes carry bursaries (e.g. Egypt’s Basic Training Programme).

G) Globalization and international cooperation International cooperation (WSIS); Multilateral cooperation (e.g. eEurope+ in EU, UN); bilateral programmes; measures to promote trade in technology-intensive goods; Licensing and import of foreign technology and capital goods.

International, Arab, African organizations, WSIS; trade treaties, aid programmes. IPA reforms; IT Parks to attract FDI in ICTs.

4. SOME SUCCESS STORIES 4.1 Overview The previous chapters have reviewed trends in ICT development and diffusion from 1995 to 2002 and summarized a set of policies to promote ICT development. This chapter examines four ‘success stories’ in ICT development and Internet take-up in different regions and countries to identify some of the factors underlying progress in:

• Asia – the development of mobile Internet in the Republic of Korea and the growth of the Internet in the Republic of China;

• The Middle East – expansion in ICTs in Egypt; and • Europe – rapid growth of mobile telephony in the Czech Republic.

In each country, a successful compromise was achieved (in some cases, negotiated) between the stakeholders the consumers, the government and the market operators, all endowed with different strength, power, institutional roles and expectations. In some cases, these key players were able to work towards a common goal. In other countries, particular agents or institutions have particular strength. For example, in China, the government was quite cautious in its approach to ICTs and rising consumer incomes led to an explosion in demand and the demand-led development of ICTs. In Egypt, a dynamic ministry played a strong role in catalysing ICT development. This suggests that it is not just the policies that count towards ICT development, but who is implementing these policies that drives and enforces their implementation. Rapid progress in telecommunications development is achieved where each country achieves a compromise that works well for the characteristics of their market. It is hoped that the experiences of other countries will be instructive in helping policy-makers decide upon priorities for their country. 4.2 Expansion of ICTs in the People’s Republic of China3 The expansion of ICTs and the Internet depends on achieving a good compromise in the triangle of market demand, government policy and market operators. This triangle is not always built on equal partnerships, however. China has made strong gains in ICT infrastructure and access from very low levels of telecommunications development to per capita penetration levels that are now average among middle-income countries. In ICT diffusion, China rose from 147th in 1995 to 134th in 2001 to 118th in 2002, mainly due to gains in connectivity. In China, ICT development has been driven largely by rising incomes and growing market demand. In 2002, China’s mainline and mobile networks were the first-largest in the world, with 214 million mainline and 206 million subscribers. However, on a per capita basis relative to population, China’s telecommunication networks remain average among low and middle-income countries. In 2002, China had 17.1 mainlines per 100 inhabitants; 16.0 mobile subscribers per 100 inhabitants; and 2.7 PCs per 1,000 inhabitants - rates which lagged behind several other East Asian countries including Singapore and Malaysia. Less than 2 per cent of the population are online.

3 Main source: ‘China and the knowledge economy: Seizing the 21st century’, World Bank.

ICT Development Indices Report 2004

22

However, China has very high growth rates in information infrastructure over recent years, over three times as high as overall economic growth. In 2002, China had among the highest growth rates in mainlines (19 per cent) and PCs (42 per cent) in East Asia. Internet connectivity is growing especially fast, albeit from a low base. The China Internet Network Information Center estimates that there were 22.5m Internet users in January 2001, five times the number one year and a half earlier. This explosive growth in Internet use makes China the leading Internet market in Asia (excluding Japan). Total telecom estimates that there are around 520 Internet Service Providers (ISPs) and 600 Internet Content Providers (ICPs) in China. Although the government recognizes the importance of the ICT industry, the World Bank Institute finds that ‘the telecom legal and regulatory environment has not kept up with major changes in ICT sectors since the current telecommunications law was enacted in 1987… Telecommunications regulation has been based on fragmented administrative decrees dealing mainly with technical standards and service tariffs’. It notes that this has tended to create uncertainty for investors and market entrants. In 2000, the State Council passed regulations defining basic and value-added services. Responsibilities, including universal access obligations, were set out in regulations for service providers. Restricting usage to select providers, using unreasonable cross subsidies or charging below-cost prices to drive out competition are illegal. Infrastructure construction and network access are still planned and regulated by central and local government. One feature of Internet access in China is the high degree of state control over content: it is not permitted to disseminate content that conflicts with constitutional principles; harms national security, interests and unity; damages religious policy; promotes superstition; destructs social discipline and stability; or impairs the lawful rights of others. In market structure, the World Bank Institute notes that state-owned China Telecom retains its mainline monopoly and is the dominant player in the Internet market. There is a duopoly in the mobile market between China Mobile (70 per cent market share) and its state-designated competitor (30 per cent). The World Bank concludes that ‘Chinese telecom markets have yet to be liberalized and deregulated’. 4.3 Expansion of ICTs in the Arab Republic of Egypt4 The experience of Egypt offers a contrasting picture. Egypt rose strongly up the ICT diffusion rankings from 154th in 1995 to 112th in 2002. Egypt has strong traditions of central government and reliance on government to provide services and policy leadership. Its economy has suffered a slowdown and deterioration in economic conditions since 2000, which has led to reductions in real wages and consumer purchasing power. As a result, the demand-led model of ICT development that China is currently experiencing does not apply to the same extent in Egypt. The Egyptian Ministry of Communications and Information Technology (MCIT) is widely recognized to be a forward-looking and dynamic Ministry and is leading the way in promoting and encouraging the use of ICTs. It is doing this by encouraging investment and investing heavily in infrastructure, building public-private

4 Main source: Egypt's Telecommunications Master Plan II Overview 2004, MCIT, 2004.


23

collaboration through its weekly meetings with the private sector and experimenting with models of shared public access in the IT Clubs. The Egyptian MCIT was established in October 1999 but has already taken considerable action and made real progress in expanding ICTs access in Egypt. It set the long-term goal of creating an export-driven, private-sector led ICT market. Infrastructure is being expanded and upgraded under Masterplans I (2000-2004) and II (2004-2007), which aim to provide nationwide connectivity in an integrated telecoms network and backbone. Objectives for infrastructure include:

• Implementing modem pooling to divert Internet traffic to the data network and relieve switches from traffic pressure;

• Digital Subscriber Loop deployment by Telecom Egypt and service providers; • Introducing other access technologies e.g. fixed wireless and fibre optic links; • Building reliable Multi-Service Backbone based on ATM and IP routing; • Establishing Internet Exchange Points as hubs for Middle East traffic; • Upgrading circuit-switching technology to more efficient packet-switching.

Under Masterplan I, fixed mainlines increased to 11.5m subscribers in 2004 (Figure 6 below). Under Masterplan II, wireless and wire-line technologies will be combined and access services liberalized to attract private investment. There are now over 6m mobile subscribers in Egypt, bringing total teledensity to 13.2 per 100 people. Figure 6: Telephone Mainline Density in Egypt, 1995-2002

Telephone Mainline density

3

5

7

9

11

13

15

17

1995 1996 1997 1998 1999 2000 2001 2002

Mai

nlin

e d

ensi

ty p

er 1

00 c

ap

AlgeriaEgyptMoroccoSaudi ArabiaSyriaTunisiaAverage

Most significantly, the Ministry abolished Internet subscription charges in January 2002, so Internet prices now cost the same as a local call, making Internet prices in Egypt among the lowest in the world at Egyptian Pounds 1.25 or US18 cents per hour. Charges are shared between Telecom Egypt and consumers’ ISPs in a joint venture


24

that became profitable in July 2003. A MCIT/World Bank e-readiness evaluation found the abolition of subscription charges had a direct impact on Internet usage, with 68 per cent of Egyptian Internet users having started to use the Internet after the Subscription Free Internet initiative was introduced. Some 3m people in Egypt are now Internet users, with ISP density at 474,727 inhabitants per ISP in 2004. This is an example of a working compromise between market and consumer interests that has had a direct and measurable impact on Internet usage. The Ministry is encouraging informal interactions between the private and public sectors and there are weekly meetings between the Ministry and MNCs in the sector to share strategic ideas for building the IT and telecoms market. This provides an informal means of sharing concerns and ideas as to how to go about promoting the development of the sector. As a result, the Ministry has launched several programmes for skills development to meet the needs of the IT sector. The Professional Training Programme was launched in 2000 in collaboration with Cisco systems to train 25,000 IT professionals and 5,000 engineers. Training academies have been established for skilled IT professionals. 11 MNCs are now participating in this programme: training is provided by companies benefiting from training under the scheme (including Cisco, Nortel, Ericsson, Lucent, Huawei and Alcatel). The programme is announced in the press and universities and provided free of charge, subsidized by MCIT and private firms. As a region, the Middle East has been estimated to be 3-4 years behind the U.S. in terms of IT development and 2 years behind Europe (Middle East Economic Digest, 2001). Internet penetration in the Gulf States (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) is more than 15 times higher than in the rest of the Arab world (Insight Research, 2000). Although these countries account for less than 12 per cent of the Arab world’s population, they claim more than 60 pert cent of the region’s Internet users (Nua surveys, Insight research, 2000). Studies estimate that there are 2.5-3 Internet users per subscriber account in most Arab countries, except for Jordan (with 6 users per account), Egypt (8 users per account) and Iraq (25 users per account). However, there is evidence that governments are giving greater recognition to ICTs, with good results. 4.4 Expansion of mobile Internet in the Republic of Korea5 Finding the optimal market structure is not always easily achieved. In some cases, it may be necessary for the Government to intervene and take early action where market players may be displaying anti-competitive tendencies. This was the case in the Republic of Korea, where the government stepped in and encouraged companies towards competitive conduct, in the interests of consumers and the market as a whole. The Republic of Korea has risen up the ICT diffusion rankings by 12 places, from 26th rank in 1995 to 14th rank in 2002. This is due to significant gains in connectivity (which outweigh a small decline in access scores). All the evidence suggests the Government of Korea has consistently prioritized telecommunications and ICT development. Moreover, the government has not been afraid to intervene impartially in the interests of the overall development of the market.

5 Source: Korea Internet White Paper (2002), National Computerization Agency and Ministry of Information and Communication, Republic of Korea.


25

The government of the Republic of Korea has taken decisive action on ICTs and the Internet from early on. The Korea Information Infrastructure project was launched in 1995 and by 2000, high-speed high-capacity optical transmission networks had been established in 144 regions. The Government specifically sought to provide high-speed Internet and multimedia services at low cost, including discounted rates for Internet access for 10,000 primary, middle and high schools. These efforts have been rewarded: at the end of 2001, 7.8m people subscribed to high-speed Internet services and 56.6 per cent of the population used the Internet, one of the highest rates of Internet usage in the world. However, when it came to developing the mobile Internet network market for wider consumer access, the Government faced new challenges. Mobile Internet has attracted attention as a next-generation communication market with the convergence of mobile and wired Internet technology. In wired Internet access networks, one network is linked to many ISPs. In the mobile Internet market, mobile carriers limit the content providers and ISP service options available to subscribers in a monopoly stranglehold over the service. Korean mobile carriers in control of mobile Internet networks locked out competing carriers and prevented them from tapping into their networks to maintain market share and gain more subscribers. The Government, therefore, concluded that the mobile Internet market was not as robust as it could be, to the detriment of consumers’ interests and the market as a whole. It may be considered as an inefficient allocation of resources that does not follow the convergence of mobile and wired services. The Ministry of Information and Communication of the Republic of Korea stated that, in principle, mobile carriers must open their proprietary mobile Internet networks to other mobile carriers, content providers and all Mobile Internet Service Provider (MISP). Without forming a partnership with wired Internet services, mobile carriers must invest more to build a proprietary mobile Internet network. The MIC further guided content providers and mobile carriers to share openly the evaluation standards and registration guidelines for content providers. The three mobile carriers agreed to list openly the registration standards for companies wishing to become content providers, as well as revealing their hidden menus on their web portals. In addition, the government also pushed mobile carriers to share their gateways and open their Inter Working Function when the domestic mobile Internet standard platform was agreed in late 2002. This should ultimately ensure that content providers can produce content more conveniently and mobile devices should have fewer compatibility problems. 4.5 Expansion of mobile telephony in the Czech Republic The remarkable expansion of mobile telephony in the Czech Republic illustrates some of the factors underlying rapid expansion in mobiles. The Czech Republic has risen nine places up the ICT diffusion rankings from 60th in 1995 to 35th in 2002, due to improvements in connectivity and access. In the Czech mobile market, a duopoly was established that allowed an optimum compromise to be achieved between investments in infrastructure and the prices consumers were prepared to pay. This supports the finding of the ITU (World Telecommunications Development Report, 2002) that a competitive market structure is generally better than a market structure with no competitive elements.


26

After the change in regime, the Czech Republic experienced challenges typical of many transition markets: the country inherited an outdated infrastructure operated by a state-owned monopoly following years of under-investment. The opening up of the economy to foreign investment and market forces and moves towards European accession led to rapid growth and modernization of telecom infrastructure, a vibrant mobile sector and flourishing Internet market. In 2002, the European Information Technology Observatory concluded "the Czech Republic remains the most dynamic ICT market in Central and Eastern Europe". This is especially true of mobile telephony. In 1993, the Czech Republic had a very low average level of mobile phone penetration for CEE. In 2001, vigorous growth meant that it had one of the highest mobile penetrations in CEE in Figure 7:

Figure 7: Cellular Subscribers in CEE, 1993-2001

0

10

20

30

40

50

60

70

80

1993

1994

1995

1996

1997

1998

1999

2000

2001

Pen

etra

tio

n p

erce

nt)

Bulgaria Croatia Czech Republic Estonia Hungary Latvia Lithuania Poland Romania Slovak Republic Slovenia Average

There are three main reasons why the mobile sector grew so rapidly. The main players, Eurotel and RadioMobil, benefited from underdeveloped infrastructure and long waiting lists in the mid-1990s. There was ‘enough, but not too much’ competition in their duopoly, which allowed operators to achieve a good compromise between price and investment, without undercutting margins too heavily. A change in consumer lifestyle made mobile phones an essential convenience. Introduction of prepaid services fuelled mobile growth. A third operator, Český Mobil, entered the market in March 2000. Mobile penetration surpassed mainline penetration in 2000 and there are now over 7.5 million subscribers in a population of 10m. As the mobile market nears saturation, operators are diversifying products and services: for example, promoting one SIM-card for work and another for personal use. Price-conscious Czechs may own two phones to take advantage of cheaper prices from other providers on messages, as well as voice. Operators are marketing 'm-commerce' and mobile games, and following international strategies promoting new technologies or targeted consumer segment-specific strategies. The question is now


27

whether operators can capitalize on their early experience gained from the Czech mobile expansion to market new and innovative strategies for m-commerce and games in the Czech Republic and elsewhere.


28

5. ICT DEVELOPMENT IN AFRICA 5.1 Overview The previous chapters have reviewed policies for ICT development and illustrated these with reference to several countries that successfully boosted their ICT development. This chapter looks specifically at ICT development in Africa, and some of the policies and programmes that are being undertaken to encourage and promote the diffusion of ICTs. ICT development in Africa is changing rapidly in infrastructure development, usage and institutional set-up. There has been rapid progress in certain sectors, notably mobile teleph

Date post:	31-Jan-2021
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

THE DIGITAL DIVIDE: ICT DEVELOPMENT INDICES 2004 · The Digital Divide: ICT Development Indices...

Documents